Forex Trading What is TP & SL

Take Profit (TP)
Definition: A predefined price level that a trade will automatically close in to lock the profit.
It serves to help traders in locking their profits once the market reaches a favorable level.
If you buy EUR/USD at 1.1000 and set a TP of 1.1100, it means your trade will be automatically closed once the price hits 1.1100 and locks your profit.
Stop Loss (SL)
Definition: A predefined price level where a trade automatically closes in to limit the losses.
Purpose: This safeguards traders from undue losses when the market becomes adverse to their position.
Example: You sell EUR/USD at 1.1000 and establish an SL of 1.0900. If the price hits 1.0900, the trade will automatically close, saving your losses.
Key Points
Automation: Both TP and SL are set in advance. They work perfectly even if you don’t have time to observe the market.
Risk Management: They will help keep discipline in your trading because these prevent making emotional decisions.
Customization: TP and SL levels will vary with your trading strategy, risk tolerance, and market conditions.
Do you want to know how to calculate or set effective TP and SL levels?